Fitch Solutions company Business Monitor International (BMI) recently held its short-term forecast for economic growth in Bangladesh steady, expecting the country's real gross domestic product (GDP) to grow by 5.4 per cent year on year (YoY) in fiscal 2023-24 (FY24).

Private consumption will continue to be low as high inflation undermines people's purchasing power, BMI noted. Stronger remittances inflows would, however, likely offer some relief for households.

"A weak local taka or BDT, a shortage of foreign currency, high-interest rates, capital goods import restrictions and fiscal con solidation will weigh on gross capital formation," BMI said in a report.

Foreign direct investment will receive some boost due to greater policy certainty and lower risk of unrest following the January 2024 elections, it noted.

"In the short term, exports will continue to contribute positively to economic growth beyond the historic trend prior to the COVID-19 pandemic," it said.

Fiscal consolidation will limit public infrastructure investment and thereby add to the pressures on gross fixed capital formation, media outlets in Bangladesh reported citing the BMI document.

Consumption will be dragged down by muted private consumption, as high inflation undermines households' purchasing power.

A rise in energy prices due to the Israel-HAMAS war poses a key downside risk to BMI’s outlook for the country.

Fibre2Fashion News Desk (DS)

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